Private Nonprofit

Appeal Brief

Summary Paragraph

On October 10, 2018, Hurricane Michael made landfall, resulting in extensive damage throughout Florida. Bayside Church (Applicant) is a Private Nonprofit (PNP) organization that requested Public Assistance (PA) funding to restore a Building the Applicant intended to use as a worship center. FEMA determined the Building was ineligible because it functioned as a fitness center at the time of the incident and was not in active use for an eligible service and, even if it was eligible, FEMA could not provide PA funding that duplicated insurance proceeds. In its first appeal, the Applicant asserted that the Building met exceptions in FEMA policy for PA eligibility when a facility is inactive because it demonstrated the inactivity was due to remodeling and demonstrated its intent to use the Building within a reasonable amount of time. The Applicant also stated duplicated benefits should be adjusted to the total cost of reconstruction and the Applicant’s legal fees. The Florida Division of Emergency Management (Recipient) recommended approval. FEMA denied the appeal because the Applicant did not demonstrate that it owned or operated an eligible facility at the time of the declared incident, actual insurance recovery exceeded the total project cost, and the remaining project cost fell below the minimum project threshold. The Applicant’s second appeal reiterates the claim that it met facility exceptions for PA eligibility.

Authorities and Second Appeals

• Stafford Act § 406(a)(1)(b).
• 44 C.F.R. §§ 206.206(a), 206.221(e), 206.222(b).
• PAPPG, at 11, 16, 18, 133. 
• Trinity United Methodist Church, FEMA-4399-DR-FL, at 2; Anchorage Middletown Fire & EMS, FEMA-4497-DR-KY, at 3.

Headnotes

• To be eligible for funding, PNPs must own or operate a facility that provides a critical service or a noncritical, essential social service to the general public at the time of the declared incident. 
  • Here, the Applicant has not demonstrated the Building provided an eligible service at the time of the declared incident.

Conclusion

The Applicant has not demonstrated the Building was in active use for an eligible purpose at the time of the declared incident. Therefore, the Building is ineligible for PA funding, and the appeal is denied.

Appeal Letter

Appeal Analysis

Background

From October 7 through 19, 2018, Hurricane Michael impacted the state of Florida, resulting in a major disaster declaration on October 11, 2018. Bayside Church (Applicant) is a Private Nonprofit (PNP) organization that requested Public Assistance (PA) funding to restore a damaged building (Building) the Applicant intended to use as a worship center. The Applicant purchased the Building prior to the declared incident. However, the predisaster tenant, a fitness center, had permission to continue to occupy the Building at the time of the declared incident. On November 30, 2022, FEMA denied funding in a Determination Memorandum, finding the Building functioned as a fitness center at the time of the declared incident and was ineligible because it was not in active use for an eligible service. Additionally, FEMA stated that even if the Building was an eligible PNP facility, FEMA was required to reduce any eligible project cost by the amount of actual insurance proceeds received by the Applicant to avoid a prohibited duplication of benefits, which reduced the eligible project cost to zero dollars.

First Appeal 

In its January 4, 2023 first appeal, the Applicant provided background information on the events leading to its purchase of the Building. The Applicant explained that it sold its church on September 28, 2018, and purchased the Building on October 5, 2018, two days before the start of the disaster’s incident period. However, prior to the disaster, the Building was leased to a fitness center, and that entity had 45 days after the closing to vacate the Building. The Applicant confirmed that although it sold its church before the disaster, it was allowed to continue to occupy/use the church for an additional four months after closing. 

The Applicant asserted that the Building met exceptions in FEMA policy for PA eligibility when a facility is inactive, because (1) the Building became inactive for remodeling when it was purchased; and (2) the Applicant demonstrated intent to remodel and occupy the Building within a four-month window from the date of purchase, which it stated was a reasonable amount of time. The Applicant stated that insurance benefits should be adjusted to the total cost of reconstruction and legal fees it incurred. The Applicant provided contracts for the church sale and for the purchase of the new Building. The Florida Division of Emergency Management (Recipient) supported the appeal in a January 11, 2023 letter.  The FEMA Region 4 Regional Administrator denied the appeal in a decision dated 

November 15, 2023. FEMA found that, because the Building’s only use was as a fitness center, and, because a fitness center was neither a critical service nor an essential social service, the Applicant did not demonstrate that it owned or operated an eligible facility at the time of the declared incident. FEMA also found that, even if the Building had been an eligible PNP facility, actual insurance recovery exceeded the total project cost, reducing the remaining project cost below the minimum project threshold.

Second Appeal

The Applicant submits a second appeal in a letter dated January 13, 2024, in which it again asserts that the Building was inactive at the time of the declared incident but meets the conditions for an eligible PNP facility under the inactive facility provision in FEMA policy. In addition, the Applicant states FEMA’s calculation of insurance proceeds received versus eligible costs is flawed. The Applicant states, if it prevails on appeal, it intends to follow up with a corrected cost claim summary to justify the costs claimed. The Recipient forwarded the appeal with its support via letter dated March 7, 2024. 

Discussion

FEMA may provide PA funding to an eligible applicant for the repair, restoration, reconstruction, or replacement of an eligible PNP facility damaged or destroyed by a major disaster.[1] To be eligible for PA funding, an eligible PNP applicant must own or operate an eligible facility.[2] An eligible PNP facility is one that provides a critical service or a noncritical, essential social service to the general public.[3] If an eligible PNP owns the entire facility and leases a portion of it to another entity, the facility is eligible provided it dedicates more than 50 percent of the space to eligible services.[4]For PNP facilities, more than 50 percent of the facility had to be in active use for an eligible purpose at the time of the declared incident in order for the facility to be eligible.[5] It is the applicant’s responsibility to provide documentation to substantiate its claim as eligible and to clearly explain how those records support its appeal.[6]

The Applicant argues the Building is eligible for PA funding under the FEMA policy applicable to inactive facilities.[7] Specifically, the Applicant states that the Building was only temporarily inoperative, that it became inactive for remodeling when it was purchased, and that the Applicant intended to begin use of the Building for an eligible service within a reasonable amount of time. While the Building may not have been an active worship center at the time of the declared incident, the record demonstrates it was nonetheless an active facility. The administrative record reflects that the predisaster tenant was actively using the Building to provide an ineligible service (i.e., a fitness center) at the time of the declared incident. Additionally, the terms of the sale permitted the predisaster tenant, who provided the ineligible service, to continue to occupy the Building for another 45 days after closing, or stated differently, another 43 days following the start of the disaster’s incident period. Even if the Building had been inactive at the start of the declared incident, the applicable FEMA policy requires that for PNP facilities, more than 50 percent of the facility must have been in active use for an eligible purpose at the time of the declared incident.[8] Therefore, as the Applicant has not demonstrated the Building was in active use for an eligible purpose at the time of the declared incident, it is not eligible for PA funding.[9]

Conclusion

The Applicant has not demonstrated the Building was in active use for an eligible purpose at the time of the declared incident. Therefore, the Building is ineligible for PA funding, and the appeal is denied.